Journal of Philosophy, Inc. Rational Choice and Social Theory Author(s): Debra Satz and John Ferejohn Source: The Journal of Philosophy, Vol. 91, No. 2 (Feb., 1994), pp. 71-87 Published by: Journal of Philosophy, Inc. Stable URL: http://www.jstor.org/stable/2940928 . Accessed: 28/03/2011 12:15 Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at . http://www.jstor.org/action/showPublisher?publisherCode=jphil. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Journal of Philosophy, Inc. is collaborating with JSTOR to digitize, preserve and extend access to The Journal of Philosophy. http://www.jstor.org RATIONAL CHOICE 71 RATIONAL CHOICE AND SOCIAL THEORY* T n HE theory of rationalchoice playsa central role in the social sciences. The received view among philosophers who study rational-choice theory (both proponents and critics) holds that the theory is psychological and individualistic. Rational-choice theory is taken to be a psychological theory in that it explains a person's actions in terms of her mental states. A rational choice or action is one in which the agent takes the best available action given her preferences and beliefs. The theory is also taken to be an indi- vidualistic theory in that it applies directly only to individuals (that is, only individuals have preferences). The most common philosophi- cal interpretation of rational-choice theory conceives of it as a psy- chological theory wedded to a reductionist program in the social sciences, where the behavior of a social aggregation is explained in terms of the mental states (that is, the desires and beliefs) of its component individuals and their interactions. On the received view,1 one cannot be a rational-choice theorist without also being a methodological individualist.2 We believe that the received interpretation is wrong about the nature of rational-choice theory. While rational-choice theory con- tains statements that can be interpreted in individualist psychologi- cal terms, we shall argue that such an interpretation is optional. A theory-a formal syntactic structure-can be interpreted in distinct ways, and how we interpret the theory depends on its larger context. In particular, we believe that rational-choice theory is consistent with nonpsychological interpretations that in some contexts are more plausible. Even where people do act as the theory predicts, the best rational-choice explanation of their actions may not be an indi- vidualist, psychological one. * Thanks to Samuel Bowles, Michael Bratman, David Copp, John Dupre, Geoff Garrett, Peter Godfrey-Smith, Daniel Hausman, Andrew Levine, Daniel Little, Alan Nelson, Alexander Rosenberg, Jonathan Riley, and Elisabeth Wood for com- ments. Participants at workshops at U.C. Davis, CREA (Paris), and the Public Choice Society Meetings provided valuable responses. l The received view we are criticizing is held primarily by philosophers. Despite some notable exceptions (e.g., G. Becker, The Economic Approach to Human Be- havior (Chicago: University Press, 1976)) economists have long expressed skepti- cism about rational-choice theory as a psychological theory. Cf. P. Samuelson, "A Note on the Pure Theory of Consumer's Behavior," Economica, v (1938): 61-71. Economists have embraced a purely behaviorist interpretation of the theory, how- ever, and generally seem to endorse what we refer to below as a reductionist program. 2 Cf. William Riker, "The Political Psychology of Rational Choice Theory," unpublished manuscript. 0022-362X/94/9102/71-87? 1994 The Journal of Philosophy, Inc. 72 THE JOURNAL OF PHILOSOPHY In what follows, we undertake a two-part argument. In the first part, we logically detach rational-choice explanations from psycho- logical explanations. The argument of this section is meant to weaken one strategy for connecting rational-choice theory with indi- vidualism in explanation. In the second part, we show that some rational-choice explanations gain their explanatory power from fea- tures of the agent's environment. The psychology of the agent in such cases is an entirely imputed one: "preferences" are derived on the basis of an agent's location in a social structure.3 We believe that rational-choice explanations are most plausible in settings in which individual action is severely constrained, and thus where the theory gets its explanatory power from structure-generated interests and not from actual individual psychology. In the absence of strong envi- ronmental constraints, we believe that rational choice is a weak theory, with limited predictive power. Even a cursory glance at the successful uses of the theory confirms this: the theory of the firm has been a far more productive explanatory theory than the theory of consumer behavior; similarly, rational-choice explanations are more powerful when their object is the behavior of political parties as opposed to voters. The primary reason for the asymmetry of explanatory success is that consumers and voters face less competi- tive environments than firms and parties. We fully realize the irony of our contention: the theory of rational choice is most powerful in contexts where choice is limited.4 The most important consequence of our argument is that struc- turalism-social theory that offers explanations in terms of irreduc- ible relational or structural properties-can be compatible with rational-choice theory. In this sense, the apparent tension between the reductionism of rational choice and the holism of "structural" theories is superficial. I (a) The received view. It is common to interpret the theory of ra- tional choice in psychological terms, as instructing an agent maxi- mally to satisfy her overall scheme of preferences. Thus understood, the theory provides only a formal and thin conception of rationality. 3 Marxist political theorists, for example, use rational-choice theory to explain various political outcomes in terms of workers' resources and institutional con- straints. Such explanations attribute interests to workers in virtue of their social positions, e.g., their place in the network of economic relations. The explanation does not proceed inductively via each worker's individual preferences; it deduces every worker's preferences from the environment. Cf. A. Przeworski, Capitalism and Social Democracy (New York: Cambridge, 1986), esp. chs. 4 and 5. 4 Cf. C. Plott, "Rational Choice in Experimental Markets," Journal of Business, LIX (1986): 301-28. RATIONAL CHOICE 73 The theory considers only the formal or mathematical properties of the agent's preferences. In particular, the content of those prefer- ences is irrelevant to the theory. It does not matter, for example, what reasons the agent has for her preferences, or indeed why she has come to hold them at all. The theory of formal rationality does not judge the rationality of the agent's preferences: "rationality" pertains only to the relations among her preferences. More specifi- cally, there is a consistency requirement on the preferences of a rational agent. On some accounts, a rational agent's preferences must be transitive: if I prefer A to B and B to C, I should prefer A to C. If I am rational, in the sense required by the theory, I shall order my preferences and act so as to achieve that preference to which I give the highest overall ranking. There are two points to notice about this interpretation. First, rational-choice theory is seen as describing what is actually going on inside us when we reason. We shall call this the internalist interpreta- tion of rational-choice theory. From this perspective, mental entities (for example, preferences and beliefs) are thought to be causally related to choice, in the sense of being reasons for an agent's having made the choice.5 The reason that an agent chooses act x over act y is that the outcome that is believed to follow from x is preferred to that which is believed to follow from y, and so preferences and beliefs are said to cause the choice. Second, on the internalist interpretation, rational choice is a normative as well as an explanatory enterprise. It tells us what we ought to do in order to achieve our aims. Insofar as an action ex- presses some choice the agent has made, that choice can be sub- jected to moral and prudential scrutiny.6 For any choice, we can inquire whether or not that choice stands in the appropriate (maxi- mizing) relation to the beliefs and preferences of the agent. Most recent criticisms of rational-choice theory have been di- rected against both the psychological mechanism upon which the theory apparently rests and its adequacy as a normative theory. The psychology of rational-choice theory is so simple that it excludes consideration of many complex cognitive processes of the sort that have occupied the attention of psychologists in recent years. Her- bert Simon7 has argued against the idea of human beings as friction- Cf. Donald Davidson, "Actions, Reasons, and Causes," this JOURNAL, LX, 23 (November 7, 1963): 685-700.